What is the cryptocurrency mining commission or fee?

Learn what is the mining commission or fee, one of the most important factors to encourage mining, the security and operation of cryptocurrencies.

PThe art of the incentive to keep miners operating and, therefore, guarantee the efficiency and safety of the network, is the mining commission. These are a kind of donation with which we help keep miners motivated to carry out their work. In addition, when no more bitcoins are mined, the mining commission or fee will be the only rewards that miners will receive for their hard work and all the expense involved in doing it.

The mining commission or fee consist of small amounts of cryptocurrencies, assigned to miners to process a transaction. These small payments reward the miners for the work done. Remember that these are the ones in charge of validating the operations, generating new blocks, adding them to the blockchain and securing the network. Hence, its importance.

In the beginning of Bitcoin, it was not necessary to include commissions or fees for our transactions to be processed. This was because the priority of the transactions that were carried out at that time was quite high. Well, there were not so many transactions with bitcoins and there was a lot of free space inside the mined blocks.

But today, the number of daily transactions in Bitcoin has grown exponentially due to its popularity. Therefore, the need for miners to include fees, in order to avoid spam transactions, and optimize the use of limited space of each blockSince there are currently many more transactions than can be processed within a block.

At this point, you may be wondering how to calculate these commissions? How do we know how much we must pay for each transaction? Well, here you will learn how to determine these costs so that miners include your transactions without having to pay more.

How is the mining commission or fee calculated?

Calculating or determining the value of the mining commission or fee depends on several factors. Being one of the most determining the size of the transaction within the block. But in addition, it also influences the activity of the network for the moment of the transaction. As well as, the urgency or speed in which you want your operation to be confirmed.

Now let's look at each of these points in more detail.

Transaction size

One of the points that affect the payment of the commission or mining fee is the size of the transaction. To see this, let's take Bitcoin as an example. As we well know, Bitcoin does not operate like traditional systems. In Bitcoin, the amount of bitcoin in the transaction that we make to calculate the commission does not matter, what matters to us is its size in bytes. The fee is not a percentage of the amount to send, it does not matter if you move 0.01 BTC or 2000 BTC.

In previous articles we have explained What is a transaction and how does it work? If you have not yet read it, we invite you to do so so that you can expand your knowledge. However in this article we will make a brief mention. A transaction in Bitcoin and other cryptocurrencies is made up of several elements: inputs, outputs, amount, TXid and, of course, fees.

Then, based on the number of inputs and outputs that a transaction has, its size will be determined. That is, the number of bytes it occupies within the blockchain.

This same situation is repeated in other cryptocurrencies as in Ethereum o Litecoin. And it is that in general, almost all cryptocurrencies follow the Bitcoin pattern to calculate the cost of a transaction.

Network status

Another important factor in determining a mining commission or fee is the state of the network at the time of the transaction. If it is congested or overloaded, chances are that the fee to pay is much higher. If not, your transaction may take hours.

This is due to the operation of the mempool and how miners can select at their leisure which transactions to add to a block. When the network is in a normal state, miners will process all pending transactions on it. While if the network is overloaded, they will give priority to those transactions that have better commissions.

Today there are various web sites that show the current state of the network. Similarly, some wallets and Bit2Me Wallet show what is the commission that needs to be paid for a transaction to be processed optimally by miners at any given time

Quick confirmation of the transaction

There are users who have no problem waiting a few minutes (sometimes hours) for their transactions to be confirmed. While others are willing to pay much more to reduce this time and speed up confirmation. It all depends on how important the time factor is.

However, no matter how much you pay, your transaction will never be confirmed if a block is not mined. Paying more means having more priorities so that your transaction is added in the next block, which hopefully will happen in a few minutes or an hour. In other words, you could have paid a lot and your transaction could not be confirmed until after one hour, at which point the next block was created.

On average, the suggested mining commission or fee varies between 21 and 30 satoshis per byte. Although this can be modified as long as you want. However, the lower the fee, the greater the waiting time for a confirmation. Since miners choose to choose or choose the transactions that give them the greatest benefits. That is, those of users who offer better fees.

Well, all these points make something very clear to us. Bitcoin fees are a competing supply / demand market for the limited space of a block. Currently 1 MB is the maximum size of a block that limit the number of transactions that can be included in it. In this context, averaging 250 bytes per transaction, only 4.000 transactions can be added in a block. The rest that is pending will have to wait for a new block.

Importance of fees

As we already mentioned, the miners are the ones in charge of keeping the cryptocurrency network operational. So the main objective of the fees is to keep them motivated, so that they can continue doing their work. Similarly, fees help prevent spam transactions within the blockchain, preventing attacks on the network.

However, today, the most important factor is to avoid attacks on the bitcoin network, since the greatest incentive for miners is the reward of new bitcoins they receive when creating a new block.

Without the need to pay these small commissions, hackers could send small transactions to the network in order to attack it. However, having to make such payments for each transaction significantly reduces this possibility.

Every day fees take on a much more important role within the network. Being those that in the future, maintain the stability of it. Furthermore, considering that as soon as the 21 million bitcoin coins In the work of the miners, the miners will no longer receive new bitcoins for mining, they will only receive the fees. Costing your expenses, such as electricity or miners, exclusively through these commissions generated by processed transactions.

Why do fees go up?

As we already mentioned, the amounts of the mining commission or fee may increase or decrease based on the state of the network. That is, the use or demand of the network at a given time. This due to the limited size of the blocks.

Therefore, if there are many more people sending transactions at a certain time, miners will give higher priority to those that offer higher fees. This causes other people who also need to confirm your transaction to increase the commission costs. For what they are paying more. Those that do not, simply remain at the bottom of the mempool, and may take hours, or even days, to confirm their operation.

Why is my transaction not confirmed?

Unconfirmed transactions are those that remain in the mempool of the Bitcoin network waiting for a miner to take them and include them in a block. This can happen because at the time of sending the transaction was made with a very low or no fee. So it will be ignored by miners while other transactions with better commissions exist.

After a while, there may be a miner that includes your transaction in a block. If you still want to rush confirmation of a transaction, you can do two things. The first is to make a Child Pays For Parents (CPFP) or make a RBF. Read our excellent articles so you know what they are and how to use them.

Resources to calculate the mining fee for our transactions

A very simple way to calculate the best fees for our transactions can be found on websites dedicated to this. Their purpose is to provide users with the best fee payment relationship. This with the intention of your transactions are carried out quickly and safely. Among these websites we can mention the following:

bitcoinfees

The website of bitcoinfee, is one of the best-known spaces to obtain a commensurate fee value for our Bitcoin transactions. On this website, we can see a very detailed graph that shows us the number of transactions that are on the network, divided into different fee levels. This allows us to know exactly how many transactions exist in a fee range and to choose the one that best suits our needs. All in order to pay the exact fee so that our transactions are processed in the shortest possible time.

statoshis

Another well known service is statoshi, on this website you can get a lot of information from the Bitcoin network. Among this information is the average network fee and recommendations for it.

statoshis

Another well known service is statoshi, on this website you can get a lot of information from the Bitcoin network. Among this information is the average network fee and recommendations for it.

the ethgasstatio

The website of the ethgasstatio is a website dedicated to offering us information on the best estimate of payments for Ethereum fees. Although in Ethereum the fee payment is very different from that of Bitcoin, this element of payment to miners is maintained in order to motivate them economically to maintain the network. In this sense, EthGasStation informs us of the recommended fee to carry out our transactions in Ethereum and that they are carried out optimally and in the shortest possible time.

Bit2Me Explorer

From our Bit2Me Explorer, you can also review all the information corresponding to mining fees. All you have to do is go to the web of our explorer and find the information about the transaction or block you want.

In this case we will see the information of block #621094. In the following image you can see all the information of said block:

As you will see, among the information provided is the well-known block reward, which is equivalent to 12,5 BTC and is given to the miner who managed to successfully mine this block. But in addition to this, you will see the section Transactions. In this section, there are each and every one of the transactions confirmed by this block. The first one is the coinbase transaction, with which the miner claims the block reward and all mining fees for confirmed transactions.

But we can also select each of the transactions in the block and review the individual commissions of each of them. For example, we can see the commissions of the next transaction:

The information in this case appears under the name of mining rate, and corresponds to the commission paid by the user for the confirmation of their transaction. All of this information is publicly available and can be openly reviewed and audited. One of the great advantages of Bitcoin and the world of cryptocurrencies.